If you will be age 65 or older on December 31, 2025, the One Big Beautiful Bill Act (OBBBA) gives you a brand-new opportunity for tax savings.
A New Bonus Deduction
Starting in 2025, OBBBA provides a bonus deduction of up to $6,000 per eligible taxpayer age 65 or older. Married couples filing jointly—where both spouses are 65 or older—can deduct up to $12,000. You can claim this deduction whether or not you itemize.
Important: If you are married, you must file jointly to benefit—even if only one spouse qualifies. Filing separately disqualifies you.
Stacking the Deductions
This new deduction is in addition to:
- The regular standard deduction
- The existing age-based additional deduction
Income Limits Apply
The deduction phases out at higher income levels:
- Singles: begins at $75,000 modified adjusted gross income (MAGI); fully phased out at $175,000
- Joint filers: begins at $150,000 MAGI; fully phased out at $250,000
MAGI includes adjusted gross income plus certain rarely seen tax-free foreign income.
Planning Opportunity
To maximize this deduction, consider strategies to keep your MAGI below (or not far above) the phaseout thresholds:
- Spread capital gains over multiple years
- Break up Roth IRA conversions over time
- Create additional business deductions or make retirement plan contributions
The Bottom Line
If you are 65 or older in 2025, OBBBA's new senior bonus deduction could reduce your taxable income by thousands of dollars—on top of the standard and age-based deductions you already receive. With careful planning, you can preserve this deduction and enhance your retirement tax savings.